Private equity firm bids for Synacor

Synacor is back at the wedding altar.

Roughly eight months after calling off a proposed merger with Qumu, Synacor, a maker of video app authentication tools and supplier of email services, has inked a deal to be acquired by private equity firm Centre Lane Partners.

The all-cash deal – for $2.20 per share – values Synacor at about $92 million. They said Centre Lane's offer is a 29% premium to the 60-day volume weighed average stock price of Synacor as of February 10. Syancor's board has unanimously approved the proposed deal.

Certain stockholders on the Synacor board have committed to tender shares that represent about 18% of Synacor's issued and outstanding shares. Following that tender offer, Centre Lane intends to acquire all remaining shares of Synacor at $2.20 each. They expect to close the deal during or prior to the second quarter of 2021.

Synacor shares were up 22 cents (11.54%) to $2.17 each in Thursday morning trading.

The deal was quickly embroiled in controversy, though, as Halper Sadeh LLP, billed as an investor rights law firm, announced it is investigating whether Synacor and its board of directors violated federal securities laws or breached their fiduciary duties to shareholders with the proposed sale to Centre Lane Partners.

Synacor said it explored multiple alternatives and believes the deal will help scale its business.

"Partnering with Centre Lane, a firm with $2 billion of capital under management and an established track record of helping software companies scale, provides our stockholders with compelling value while benefiting our customers and employees," Himesh Bhise, Synacor's CEO said in a statement. "Our Board of Directors has thoroughly and carefully considered our alternatives and believes the Centre Lane proposal is the best path forward for the company."

Centre Lane has investments in companies that include Infobase (cloud-based supplemental educational materials for schools and libraries), Nutribullet (maker and distributor of blenders and other small kitchen appliances), and Perform (digital customer acquisition).

Synacor's portfolio includes Cloud ID Identity & Access Management services, as well as its Zimbra-branded email and collaboration system (Synacor acquired Zimbra in 2015).

Synacor's media and pay-TV customers include HBO, Dish Network/Sling TV, YouTube TV, T-Mobile, Atlantic Broadband, CenturyLink, Google Fiber, Telus, TDS and WideOpenWest, among others.

The company, which has been in the midst of a transition to a more SaaS-focused business, announced the deal in tandem with preliminary Q4 2020 results. Synacor's Q4 revenues of $24 million beat guidance of $20 million to $22 million. Synacor broke even in the period, beating an expected net loss of $500,000 to $1.1 million.

Related posts:

— Jeff Baumgartner, Senior Editor, Light Reading

Be the first to post a comment regarding this story.
Sign In